It has more than two years and cost £5 million to reach the latest stage in the Competition and Markets Authority’s report on the retail banking sector and we are nowhere near the end.
As a bank customer I hope I am wrong. As an investor, I fear I am right
As investigations go, that’s neither lengthy nor expensive – ask John Chilcott – but one has to wonder whether the outcome is worth the time and expense. The most radical notion to emerge is that banks will have to set a maximum charge for unauthorised overdrafts. Set by the banks themselves, of course.
Alasdair Smith, leader of the CMA’s investigative team, thinks competition between banks will push that maximum down. He thinks, rather naively in my view, that banks will not add sneaky charges on elsewhere to compensate. Rules to stop them doing so really would have been a welcome revolution.
He also wants bank customers to be alerted when they are in danger of becoming overdrawn. Since you can already check your bank balance easily on the computer, mobile phone or at a cash machine I suspect the people who are about to overdraw will do so anyway.
One further proposal is to make it easier to switch bank accounts. Currently only 3% of account holders do so each year and Smith regards pushing that up to 4% is a modest target. I think 4% is extremely ambitious. Given the lack of incentive for any bank to help a customer to move away, and the perception that all banks are pretty much as devious as each other, I’m amazed that so many customers switch already.
I hold shares in two banks and feel absolutely no urge to sell. I just don’t see the CMA proposals inflicting any damage on the major banks or curbing their modus operandi. As a bank customer I hope I am wrong. As an investor, I fear I am right.
Burberry Hides from the Press
Seasoned travellers will know that wherever you go in the world, however poor the country you are visiting, there are always some people who have money. People who can afford to buy stuff from Burberry (BRBY).
Alas, there don’t seem to be so many of them about these days. Revenue for the year to March 31 was flat while profits were down and are likely to come in at the lower end of expectations in the current year.
It doesn’t inspire confidence to read press reports that chief executive Christopher Bailey was willing to talk to analysts but not financial reporters. Newspapers don’t have a god-given right to demand that people speak to them but in these cases they are a vital source of information for small shareholders, who have more rights than analysts.
Burberry shares have lost a third of their value over the past 12 months. One day the tide will turn as global recovery takes hold. However, I wouldn’t bet on that happening any time soon.
Thomas Over-Cooked the Truth
I hate companies that can’t be upfront with bad news and that old culprit Thomas Cook (TCG) is at it again. I would have had great sympathy for the travel company given that one of its most popular destinations, Turkey, has been badly hit by political events such as the refugee crisis and bomb attacks in Paris and Brussels have had an impact nearer home.
However, I cannot stand the contortions in the half year statement trying to hide the fact that full year profits will be at the lower end of forecasts despite reduced losses in the winter months. That suggests the summer months will be quite a struggle – and once holidaymakers realise, they will hold back bookings in the hope of picking up late bargains.
Cook shares fell heavily on what looked, at first sight, quite a promising update. Crises seem to come around a little too often. Stay well clear.
Rodney Hobson is a long-term investor commenting on his own portfolio; his comments are for informational purposes only and should not be construed as investment advice.
